Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
54 Cards in this Set
- Front
- Back
|
Businesses earn profits by converting financial physical, and labor resources into goods and services that satisfy consumer demands . This statement |
True |
|
|
Resource owners want to provide resources to businesses with high profit potential because those businesses will pay higher taxes. This statement is |
False |
|
|
Accounting provides a service 10 society by gathering and reporting information about a company's profit potentialThis statement |
True |
|
|
The primary purpose of managerial accounting is to prepare financial statements in accordance with a reporting framework e.g. GAAP ) |
False |
|
|
Generally Accepted Accounting Principles (GAAP) are designed to provide guidance for |
Financial accounting |
|
|
Which of the following types of businesses require financial information to operate effectively ? |
Governmental entities, Non-profit businesses. For profit businesses |
|
|
Public accountants perform which of the following functions to ensure that financial information provided by a Comparty to investors is in accordance with GAAP |
Conduct an audit |
|
|
Paul Savage purchased a restaurant named Burger Haven from Larry Jones . The purchase would cause the number of reporting entities to |
Remain constant |
|
|
As volume decreases fixed cost per unit increases . |
True |
|
|
a production and sales level of units Bastion Company incurred \$79.000 of fixed cost and \$74.000 of variable cost. When 7,800 units of product are prod tis (Round your final answer to whole dollars.) |
41 |
|
|
Fran Company is currently operating profitably . The company has a fixed cost structure . Based on this information which of the following statements is true ? |
If volume increases by 20\% profitability will increase by more than 20 . |
|
|
Acompany that has only varlable cost cannot benefit from operating leverad |
True |
|
|
utor Inc. ( TIprovides instructional services to its customers . TI charges $210 per student . The Company expects to serve 550 students during the coming year . All of the annual fixed cost are projected to be \$65.000 . If the estimated number of students increase by 20\% net income will increase by( Round your final answer to the near |
46 |
|
|
varded Tutor , Inc. ( TI) provides instructional services to its customers . TI charges $ 200 per student . The Company expects to serve 500 students during the com Total annual fixed costs are projected to be \$60,000 . If the estimated number of students decreases by 10% net income will |
Decrease by 25% |
|
|
Elegant Dogs and Dazzling Dogs are competing canine grooming salons. Each company currently serves 4,500 customers per year. Both companies charge $35 to gr dog groomers fixed salaries. Salary expense totals \$45,000 per year. Dazzling Dogs pays its groomers $10 per dog groomed. Elegant Dogs lures 2,000 customers fro following is true? |
Elegant Dogs ' profits will increase by more than Dazzling Dogs ' profits will decrease . |
|
|
A fixed cost structure has more risk of volatile changes net Income than a company with a variable cost structure . |
True |
|
|
Operating leverage is caused by |
Fixed cost |
|
|
As compared to companies with low operating leverage, companies with high operating leverage have |
More opportunities and more Risk |
|
|
The magnitude of operating leverage can be determined by which of the following formulas |
Contribution margin ÷ Net Income |
|
|
At a sales level of \$280,000 the magnitude of operating leverage for Donuts Unlimited is 3.8. number of units sold increase by 15 %, profits will |
in Net lncome=\%lncrease in Revenue Magnitude of Operating Leverage in Net hcome=15\%*3.8=57\% |
|
|
The break even point is the point at which |
revenue is equal to the total of fixed plus variable cost |
|
|
Green Manufacturing Company produces a product that has a variable cost of $44 per unit. Fixed costs amount to \$275,000 . The selling price of the product is Green produce and sell to break even ? |
Explanation Break keven = Flxed * cos t / C * o * n * t * r Contribution margin per underline nit=\$275,000/(\$52-\$44)=34,375 units . |
|
|
The margin of safety is a measure of the distance between budgeted sales and the break - even point It can be measured in dollars in units or as a percentage . |
True |
|
|
Which of the following formulas is used to determine the margin of safety |
All of the formulas will yield a measure of the margin of safety |
|
|
With respect to a company that is currently earning a profit , |
the higher the margin of safety the less likely a company to a loss. |
|
|
The general , selling and administrative expense budget normally prepared |
Before the cash budget |
|
|
Strategic planning focuses on? |
Long-range decision |
|
|
Pro forma statements are based on ? |
Estimates and predictions |
|
|
Which of the following describes the normal sequence followed in preparing a master budget? |
Sales budget Cash budget Inventory purchases budget Selling and administrative expense budget |
|
|
Sales budget Cash budget Inventory purchases budget Selling and administrative expense budget |
Costs of goods sold |
|
|
Information needed to prepare the cash budget is drawn from which of the following budgets ? |
Sales budget Inventory purchases budget Selling and administrative expense budget |
|
|
Which of the following is not one of the steps in the accounting cycle ? |
Record transactions О Adjust accounts Prepare Statements |
|
|
Which of the following most accurately depicts the steps in an accounting cycle ? Multiple Choice |
Record transaction data Ad Adjust accounts Prepare Statements Closet temporary accounts |
|
|
The matching principle states that |
revenues should be recorded in the same period as the related expenses |
|
|
The after closing balance in a revenue account will always be zerostatement is |
True |
|
|
The ending balances for an accounting period become the beginning balances of the subsequent accounting period. This statement is |
True |
|
|
On December 31. Year 1 Adam Company incurred $3,000 of accrued salary expense . The Year 2 recognition of the cash payment for these expenses |
decreases the amount of liabilities shown on the Year 2 balance sheet |
|
|
When a company purchases supplies on account |
Liabilities increase |
|
|
How accounting transactions are recorded will vary depending on the entity perspective taken. This statement is |
True |
|
|
Which of the following is an accurate definition of the term asset |
A resource that will be used to producere revenue |
|
|
If total assets increase , then |
liabilities , common stock , or retained earnings must Increase . |
|
|
Liabilities |
represent obligations to repay debts . may increase when assets Increase . have priority business liquidations . |
|
|
Which term describes assets generated through operations that have been reinvested into the business ? |
Retained earnings |
|
|
Which of the following is an accurate depiction of the accounting equation |
Assets = Llabllitles + Commc Stock Retalned Earnings |
|
|
Which term describes a distribution of the Company's assets back to the owners of the business |
Dividend |
|
|
Certain transactions entered into the accounting equation will cause the equation not to balance . This statement is |
False |
|
|
A deferral |
exists when a company pays cash before recognizing the associated expense |
|
|
An accrual |
exists when a company pays cash after recognizing the associated expense . |
|
|
On August 1 of Year 1 Presco Enterprises paid $1,200 cash for an insurance policy that would provide protection for a one year term. The company's fiscal closing date information , the amount of insurance expense appearing on the Year 1 income statement would be |
Explanation Cost per month=\$1.200 total/12 months=\$100 per month As of December 31. Year 1 Amount unt used=\$100 per r month*5 mon ns=\$500 ins Insurance expense Future benefit = $100 per month*7 months=\$700 prepald Insurance |
|
|
On May 1 of Year 1 Matthew Company paid $2.400 cash for an insurance policy that would protect the company for one year . The company's fiscal closing the amount of insurance expense and the cash flow from operating activities shown on the Year 1 financial statements would be A, Insurance Expense $1,600 $1,600 $1,600 \$2,466 Cash flow ($2,400 ) ( $800 ) $800 (\$1,688) |
Cost per month =\$2.400 total/12 months=\$200 per month As of December 31 Year Amount Used=\$200 per month*8 months=\$1.60C Insurance expense Future eneft=\$200 oer month*4 months=\$800 prepald Insurance Since all of the cash was pald Year 1, the total \$2.400 cash outflow would be shown on the Year 1 statement of cash flows . Zero would be she Year 2 |
|
|
represents all the benefits earned during an accounting period |
Revenue |
|
|
Unearned revenue |
occurs when a Company receives a benefit from a customer but have not yet earned that benefit . |
|
|
exists when a company receives cash before recognizing the associated revenue |
Deferred revenue |
|
|
On October 1 of Year 1 Zeta Company collected $ 1,200 cash for services to be provided for one year beginning immediately The company's fiscal the amount of revenue appearing on the Year 1 income statement would be |
Explanation Revenue eamed per month=\$1,200 total/12 months=\$100 per month As of December 31, Year 1: Amount eamed=\$100 per month * 3 10nths=\$300 service revenue Future obligation = $ 100 per month x 9 months = $900 unearned revenue |
